Ally Bank Increases Online Savings Account Rate

This morning, Ally Bank increased the rate of the Online Savings Account (OSA) by 10 bps to 1.45% APY as of 2/9/18. The OSA has no balance tiers. This APY applies to all balances. Also, the same APY applies to the IRA Online Savings. The OSA has no monthly maintenance fees. Unlike previous rate change days at Ally, no other products had rate changes today. Last Friday, Ally raised rates on several of its CDs.

APY

MIN

MAX

INSTITUTION

PRODUCT

DETAILS

1.45*%

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-

Ally Bank

IRA Online Savings Account (Traditional, Roth, SEP)

1.45*%

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-

Ally Bank

Online Savings Account

Accounts mentioned in this post. Rates as of February 9, 2018.

Thanks to DA reader, Maecl , who posted on the new rate in the DA Forum.

My Take

Rate Competitiveness

Ally Bank is a little behind its competitors on raising the savings account rate. Big internet banks like Synchrony and Barclays have already raised their savings account yields to 1.50%. Several of the smaller internet banks now offer savings accounts with 1.60% APY, and the top savings account rate is now 1.70% APY at ableBanking.

In the last year, Ally has put more focus on rate competitiveness of its CDs rather than its savings account. For example, Ally’s 11-month No Penalty CD was often very competitive in the last year and provided an easy way for Ally customers to obtain yields higher than the top savings accounts at other internet banks. Today, the top-tier No Penalty CD rate isn’t much above the OSA rate. However, Ally’s 6-month and 12-month High Yield CD rates offer customers a way to get a significantly higher yield without a long term.

Another perk for Ally customers is Ally’s tradition of offering existing customers a 5-bps rate bonus when CDs are renewed. DA reader Cumulus described his useful CD strategy that uses this rate bonus to get higher rates on all of his Ally CDs in this DA forum post.

Other Nice Features

Another way Ally is competitive is the CD early withdrawal penalties (EWPs). Ally’s EWPs are smaller than most other internet banks for most terms. In addition, Ally makes it very easy to manage and close the CDs by logging into your account and using Ally’s online CD management software.

The online account management software is just one of many online features that Ally does better than many of the other internet banks. Ally’s bank-to-bank ACH transfer service is one example. It’s easy to link multiple external accounts for transfers. Ally allows large transfers to and from external accounts, and the transfers take place in one business day.

Deposit Growth at Ally Bank

One thing to keep in mind about Ally Bank is that it has grown big. It’s now the 19th largest bank by assets in the United States. I compared its deposit growth in the last year to the other banks with internet divisions, and Ally is way out in front. For example, Ally Bank has increased its total non-brokered deposits by $12.69 billion, resulting in 19.8% growth for the year. For that same period, Goldman Sachs Bank USA grew non-brokered deposits by 7.16%, Discover Bank grew them by 10.51% and Synchrony Bank grew them by 10.24%. In short, Ally Bank has been able to grow deposits dramatically without being overly aggressive on their rates.

FDIC Insurance for Over $250k

Another nice aspect of all of Ally’s accounts is the ability to designate beneficiaries. You can choose up to 10 beneficiaries for each of your non-IRA accounts, and you can choose the designation of either “In Trust For” or “Payable On Death”. Beneficiary designations can be done online in the application or with the account management software after the account has been opened. These features make it easy to maintain FDIC insurance on deposits in excess of $1 million. I described how this can be done in this blog post.

Ally also allows customers to open an account in the name of a Trust.

Availability

Headquartered in Midvale, Utah, Ally Bank is currently the 19th largest bank in the country, with assets in excess of $130 billion and over 2.6 million customer accounts. Ally offers its services and product line to individuals 18 years or older, who have a valid Social Security number and a U.S. mailing address.

Applying for an Ally account can be done using Ally Bank’s online application or by calling Ally (877-247-2559). You can fund your new account in a few different ways:

Transfer from an Ally or non-Ally account

Check (by mail or Ally eCheck Deposit)

Wire transfer

Bank Overview

Ally Bank (FDIC Certificate # 57803) has an overall health grade of "A+" at DepositAccounts.com, with a Texas Ratio of 2.08% (excellent) based on September 30, 2017 data. In the past year, Ally has increased its non-brokered deposits by $12.69 billion, an excellent annual growth rate of 19.8%. Please refer to our financial overview of Ally Bank for more details.

How the Online Savings Account Compares

When compared to the Personal Savings accounts and Money Market accounts tracked by DepositAccounts.com with similar balance requirements that are available nationwide, 11 banks have higher rates on savings accounts and 3 banks have higher rates on money market accounts than Ally Bank’s Online Savings Account rate.

Haha.. day late is right. I opened a Marcus Goldman Sachs online savings yesterday to move funds out of Ally.com. Goldman shows funding is complete. Ally still has the funds but that will update next Monday. I went over to Goldman because Ally was still 1.35% yesterday. But today it's 1.45%. I wouldn't have opened the Goldman account if I knew Ally was going to 1.45% today. day late indeed.

Yeah, I'm considering moving some funds into All America after than month closes and the new rate becomes effective 2/21. All their account statements close on the 20th of each month. That's why they're new rate comes online on 2/21. A new month.

Matt I thought Ally would be a leader when they offered the 1.75% 11 month CD with no penalty. We now have a savings rate that matches that. Looks like I will be closing those Ally CDs sooner rather than later.

I talked to a CSR in early January who told me the response they had to the 2% 12 month CD and the 1.75% 11 month CD was overwhelming. I think they have grown their deposits so much that they don't care about being close to the rate leasers any longer. This will be the case until enough people decide to move their money elsewhere.

I have already closed 2 -11 month Ally CDs to open an 18 month CD @ 2.30% and a 5 year at 3%. Still have a few more that if rates go up those CDs will be closed. So they have a lot of funds but these funds are very liquid.

i would assume Ally will raise the no penalty CD rates soon because the 2 lower tier amounts are significantly lower than the savings account. there's virtually no advantage in the CD over the no penalty CD.... unless you think rates are going lower... and there's no way rates are going lower in the next 12 months.

Look and see if/how the business model changed..and comments on blogs. Other “spin offs” from old GM have very bad postings on it/them! And those spin offs do not seemingly care when those adverse comments are raised directly with reps.

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